Ann: Ausdrill Agrees to a US$1M Drilling for Equity Arrangement, page-9

I've not seen this kind of arrangement before. In some ways drilling as an industry has a kind of monopoly-like position in mineral exploration. If an explorer wants holes drilled there's only one way to do it. So contractors have to compete with each other on price, but they absolutely do not have to make non-cash deals to get work!

Ausdrill clearly see this resource as something they want a piece of and are prepared to fund the operation out of their own working capital in return for a slice of the hypothetical pie.

This may also not be as dilutive for shareholders as calculated by @1912 because of timing and price:
1) We already have half the drilling programme completed and samples at the lab.
2) Strong results from the lab will lift the price.
3) A favourable transaction for Paguanta will also lift the price.

If both happen close together and we see the Ausdrill shares allocated at a VWAP of 0.6c (before consolidation) then dilution would be 5% not 10%. The higher the price the lower the dilution. It all depends on timing and news flow...